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(Bloomberg) -- Advanced Micro Devices Inc., Nvidia Corp.’s closest rival in artificial intelligence processors, offered an upbeat revenue outlook for the current period, even while warning that US export curbs will take a bite out of sales.
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Second-quarter revenue is forecast to be about $7.4 billion, the company said Tuesday. That compares with an average analyst estimate of $7.23 billion. Chief Executive Officer Lisa Su also reiterated her projection that new chips debuting soon will help boost sales in the second half of the year.
The bullish forecast was overshadowed by a warning that US restrictions on sales to China will cost AMD $1.5 billion in revenue this year. The company had said last month that it expected to record an expense of about $800 million because of the new export rules.
The financial impact stems from an export restriction imposed in April that targeted AMD’s MI308 chips, the company said during an earnings call. Data center revenue will decline in the current period, hurt by a $700 million reduction in sales of that product, AMD predicted.
The concerns weighed on the shares, which were little changed as of 10:45 a.m. in New York on Wednesday. They had declined after the company disclosed the China sales impact, but began to recover after Su argued her case on the call with analysts.
“We’re excited about the overall AI business — I think we continue to see strength there,” she said. “I know there are some uncertainties as it relates to tariffs and other things, but this is one of those areas where from an infrastructure standpoint, there continues to be investment in AI infrastructure. And so with that, we would expect strong growth into the second half of the year.”
In addition to investor concerns about trade restrictions and tariffs, Su faces the challenge of competing with larger rival Nvidia. in the AI chip market. But AMD continues to make gains in the lucrative market for data center processors, taking share from Intel Corp. It’s also benefiting from strong demand for chips that are the main component in personal computers.
AMD’s first-quarter sales rose 36% to $7.4 billion, topping the $7.12 billion estimate. Profit was 96 cents a share, minus certain items.
Revenue in the data center division was $3.7 billion in the period, a gain of 57% from the same period a year earlier. On average, analysts had predicted $3.66 billion. Personal computer-related sales climbed 28% to $2.9 billion.